Affiliates could ease transition.

Many mortgage lending institutions whose affiliates in the banking industry are subject to the Community Reinvestment Act may find the transition to the proposed regulatory burden easier if they have a relative in the industry already knowledgeable about the compliance issues and practices.

Congress heard testimony on the issue Oct. 21 and is mulling over H.R. 1700, the Community Reinvestment Act Reform Act, which would pull mortgage bankers into the CRA world. HUD also plans to review its lender discrimination policies on FHA mortgage lending, as well as Ginnie Mae requirements.

Some mortgage banking lobbyists believe that, although CPA requirements are out of the HUD's jurisdiction, it could nonetheless adopt similar policies, especially in the heated anti-lender discrimination environment.

The CRA rankings, made by the Office of the Comptroller of Currency, the Federal Deposit Insurance Corp., the Office of Thrift Supervision and the Federal Reserve Board, break the ratings into four categories: outstanding, satisfactory, needs to improve and substantial noncompliance.

The latter two have proven troublesome to many banks that risk their business if noncompliance continues. However, since CRA took effect in 1977. only one bank has been issued a cease-and-desist order.

A sampling of mortgage lenders with banking affiliates found that of the eight lenders surveyed. a combined 42 affiliates were subject to CRA (See chart below.)

Of those, none was rated as having substantial noncompliance and only three were considered as needing improvement. Numbered rankings refer to Mortgage Marketplace's Ginnie Mae Top 10. (See Pages 6-7.)

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